Feminized management, companies “discouraged” from borrowing?

40% women on boards of directors and supervisors. This was the objective set out over 10 years ago by the Copé-Zimmerman Act, passed by the National Assembly on January 20, 2011. An increasing number of legal incentives followed to encourage fair recruitment in public bodies. underrepresentation of women.

Goal achieved and faster than expected: its participation in the boards of directors of listed French companies rose from 23.7% in 2012 to almost 44% in 2021. France ranks first in the world and is an example in this regard.

The movement also leads to a profound transformation of the economic governance of companies. Literature has made it possible to highlight many beneficial effects of this diversity, especially on company performance. It allows, among other things, a greater return on assets, an increase in innovation or even greater business value.

One of the character traits often presented to justify these results is the lower degree of risk-taking of the female leadership style: women tend to be more risk-averse than men. As our work shows, this can, however, be harmful, especially in terms of access to credit for the company.

To discourage…

Although a bank loan is an important growth lever for the company, companies run by women see a level of indebtedness that is clearly lower than that of men, for two reasons. First, from the point of view of credit supply, bankers tend to discriminate against women who apply for credit, refusing them to borrow or offering them with more restrictive conditions.

There is also the fact that potential borrowers restrict themselves by choosing not to apply for a loan: they say they are “disheartened”. This discouragement can come from procedures considered too complex, from too high interest rates, too many guarantees requested in return, or from the simple fear of a refusal.

This finding raises an interesting debate that questions the current trend of encouraging the feminization of companies. Are there limits to increasing the number of women in the management of a company? What is the effect of a higher proportion of women participating in a company on the decision-making of its managers?

We studied, in companies run by a woman, the probability that she deliberately chooses not to ask for a loan, already anticipating a refusal, that of being “disheartened”. We show that it increases substantially if the same company is majority owned by women. In other words, we highlight a major limit to the feminization of societies, a trend that exacerbates the discouragement of women leaders.

Environmental Sensitivity

How to explain such a result, which is valid regardless of the year, sector or country in which the company operates and of many variables such as the company’s level of indebtedness or the fact of being an exporter or not? Although the relationship between CEO gender and financial performance has been widely discussed in the scientific literature, few studies focus on the differential impact of the CEO’s shareholding structure according to gender.

More sensitive to their emotions than men, women leaders are still perceived to be more influenced by their external environment. Thus, if the structure of the company encourages less risky decision making, then risk taking will be lower in a company with a female leader – more susceptible to social pressure – than a similar company with a male leader.

Another potential justification: a woman is more likely to consider another woman’s objections because she shares a greater number of individual characteristics. In other words, because of the cognitive bias known as “homophilia”, a female leader will be more sensitive to the arguments of a female director. The leader will then show an exacerbated aversion to risk and therefore a greater likelihood of being discouraged.

Can we therefore conclude that quotas only increase typically female cognitive biases, such as increased risk aversion? Our study focused on a sample composed mainly of small companies, where managers tend to have more flexibility than in large companies. Future work could then study the same issue in companies affected by quotas – that is, large companies.


By Caroline Perrin, PhD student in management sciences, University of Strasbourg; Aurora BurietzProfessor of Finance, LEM-CNRS 9221, IÉSEG School of Management and Jeremy BertrandProfessor of Finance, IÉSEG School of Management.

The original version of this article was published on The Conversation.